Decision to hire a British CEO is a bold move for the manufacturer, but is it a smart one?March 8, 2005: 2:11 PM EST
By Robert Cyran, Breakingviews

Howard Stringer

LONDON (Breakingviews) -
Sony's hiring of a Brit to try and turn the group around may be a shock.

But some change in the group's strategy was inevitable. The Japanese electronics giant has lost its way over the past several years and hasn't mounted a credible revival strategy.

The new boss, Howard Stringer, plans to continue and complete the transformation of Sony from a manufacturing company into a combined media and hardware company.

It's clear something needs to change.

Sony's electronics division, which accounts for about 70 percent of sales, is barely profitable. And this drags down the rest of the company. Sony's operating margin in the current financial year is expected to be less than 2 percent.

Stringer will shake up the company in two ways. First, his background is in media, not electronics. He will be more willing to take a fresh look at the group's manufacturing divisions.

Second, he is the first non-Japanese person to run Sony. He may be more willing to ride roughshod over some of the cosy conventions of Japanese corporate life than a more traditional company man.

The inspiration for Sony's choice seems clear. Some of the most successful turnarounds in Japan in recent years have been led by foreigners.

One of the most successful, and politically popular, recoveries has been the car maker Nissan. Brazilian-born Carlos Ghosn turned the nearly bankrupt company into one of the most profitable car companies. And Ghosn is on Sony's board.

But Stringer may have a tougher time. Ghosn had an established record in car making. And his task was straightforward -- cut costs as fast as possible and introduce new models.

While Stringer was successful in running Sony's U.S. entertainment division, he has never led a manufacturing company. And he is trying the strategically slippery task of transforming Sony into something like a mammoth version of Apple -- that's to say blending content and manufacturing to make iconic high-tech goods such as the iPod.

But this combination has proved awkward in the past for several companies. Stringer has his work cut out.

Breakingviews is Europe's leading financial commentary and analysis service. Its team of financial journalists comments on the most important financial stories of the day, as they break.